Software developers using the live MTD for VAT filing mechanism have encountered inexplicable errors in the data being returned by HMRC’s systems.

In some cases, the live MTD system is sending back confirmation messages, but omitting reference numbers. This could be inconvenient, as in some cases users have contacted the MTD online services team after getting an acknowledgement email, only to be told that their returns haven’t been submitted.

One developer explained that the problems appear to stem from HMRC’s Get Obligations API sending back dummy data, demonstrated in tables showing obligations that predate the implementation of MTD and other obligations marked open, even when a subsequent column shows a return filed date.

An HMRC spokesman said the problem had been identified and was in the process of being rectified. AccountingWEB is awaiting further details on how the data glitch came about.

One the frustrations voiced by the developers will be familiar to other tax software programmers and accountants with experience of HMRC “customer” service: “The software developers support team won't investigate individual cases because they don't have access to the data, the MTD helpdesk won't discuss the issue with the software vendor because they'll only talk to the business, and neither the business nor the MTD Helpdesk has enough technical knowledge to discuss the issue in sufficient detail.”

The API issue comes at a time when developers are under the cosh to rewrite their VAT submission headers to include fraud-prevention ID codes. This requirement was only notified to developers last month, and was accompanied by the threat of a £3,000 for failing to comply.

The reaction from developers contacted by AccountingWEB to the new technical requirement was essentially a resigned shrug of the shoulders – the extra cost and rework is something they get used to get used to when working with the tax authorities.

But the penalty for non-compliance is a different matter. This is the first time that HMRC’s software partners have been subjected to a potential financial sanction, at a time when the tax department is relying on them to supply free and low-cost software to enable businesses to comply with MTD.

In private conversations with developers, HMRC officials have assured them that they have no intention of actually imposing the fines. But why enshrine the power in the first place, particularly in a statutory instrument that is not subject to parliamentary debate?

The business software trade body BASDA expressed disasppointment about the measure and the lack of consultation surrounding it and has been pressing the tax department on why this Draconian approach was necessary.

HMRC, meanwhile, challenged that interpretation and said, “The fraud header information has been on the Developer Hub since 2017 and developers were reminded about this in October 18. The spec was finalised in December 2018 and this was communicated to all developers.”

About John Stokdyk

AccountingWEB’s Head of Insight has been with the site since 1999 and likes to spend his time studying accountants’ technology habits. When not nerding out, you can find him exploring obscure indie music and searching for the perfect organic sourdough loaf from his base in Brighton, UK.

There was once a saying - 'If it ain't broke, don't fix it' - obviously not heard of in the crazy world of HMRC.

I have, belatedly, realised why they are so hell bent on digitizing everything - they realise that at the the end of the day no real,intelligent, human, would wish to admit that they were employed by HMRC. It's a bit like being employed by Mickey Mouse.

Perhaps the software people should get together and tell HMRC exactly where to go. Interesting though to know who actually writes their software. No - it has to be in house no-one else could face the bad publicity.

Perhaps we should be more active (and forceful) in billing HMRC for time wasted. I know they want us to bill the client before they will 'reimburse' the client, but an understanding client will be agreeable.

A very useful and timely article John - particularly in our case, having just put the phone down after speaking to HMRC.

Having just registered our company for MTD and sorted out a glitch at the software end that was preventing me from authorising the software to speak to HMRC, I then found that when I could authorise the contact, as far as HMRC is concerned, "the taxpayer" (that is, our company) "doesn't exist". Twenty minutes on hold and then through to the HMRC VAT help desk, who then had to put me through to an MTD specialist. Extremely pleasant chap who wanted to be helpful but said that any help he could give would be very limited as he had no way of knowing how the software works and what it was doing.

I spent the whole of yesterday and all of this morning trying to ensure that we are in the position to fulfil our legal obligations under MTD. I still don't know if we are, so I am keeping a copy of this article, notes of phone call with the software suppliers and with HMRC to demonstrate that you can do your best but sometimes even that isn't enough. And this, despite everyone doing their best within the limits imposed on them to be as helpful as possible. But for this I think I'd have lost the will to live

That is what is putting me off even looking at lists of MTD bridging software never mind registering. I don't want to spend more than about 10 minutes on downloading software and then registering and uploading the next return... some hope...

When the floodgates are opened and hundreds of thousands of taxpayers and/or their accountants start trying unsuccessfully to file MTD returns over the next few months there is going to be absolute chaos. Is there a case for carrying on filing under the old system whilst this is sorted out?

The Software companies marketed their MTD software as if it was Xmas presents come down from Heaven. They totally ignored the experienced reality of HMRC's experiments in IT.
Sorry but, I fervently wish that at least a couple of these Purveyors of Perfection go bust over this.
That way they will learn to be wary of HMRC bearing gifts.

And if they did go bust where does that leave Hmrc with the clients records held in the Cloud . Nothing is said about wiped or corrupted data all held digitally . Hmrc should feel seriously worried about Fraud .

Given the phenomenal number of developers trying to enter this alleged gravy train, clearly 90% of them will go bust inside of 2 years as prices fall to a default "cheap is best" position.

Right now I understand you cant change software vendor very easily. You can select it when you switch from HMRC..........but what if you went with someone and they go bust or you just don't like it? I think you are then stuck.

It depends how fast the HMRC servers are, but you should be able to change MTD vendor in about 1 minute. You could have accounts with a number of different systems and swap your authorisation between them. Although the authorisations last 18 months in theory, they can be cancelled easily. (depending upon how quickly the HMRC servers are running).

a) Statutory instruments are subject to parliamentary scrutiny and debate. Not all of them and it depends substantially on the parties as to what happens with them. There are also standing committees that formally review all SIs a joint committee on vires and a lords committee on merits.

The anti-fraud headers SI is exactly the sort of thing that should go as an SI rather than the alternative which is departmental guidance. The details would not be in primary legislation.

b) The original specification for the anti-fraud headers was in the specifications for MTD when I first looked at them which was some time last year. It was changed a bit, but not a lot. What changed was that originally HMRC said it would be sensible for people to write this as it might become compulsory and then they said they were compulsory.

I was a bit surprised at the proposal for a 3K fine, but we will see what happens on the HMRC have said they will aim to get any issues with anti-fraud headers resolved rather than just hit people with fines.

MTD is difficult because it involves the interplay between a number of computer systems. It is, therefore, harder to work out where the problem lies.

As far as glitches go our main problem has been slow servers. We haven't submitted any returns for the wrong period or had the wrong values submitted.

"MTD is difficult because it involves the interplay between a number of computer systems. It is, therefore, harder to work out where the problem lies."

And so we all end up on the merry-go-round of everyone refusing to accept any responsibility for the problem and blaming someone else's systems/software for causing it and directing us to speak to the other party because "Sorry, we can't help you".

Nor is it just MTD. This seems to be the norm that we're all expected to accept and live with since everything has become computerised. Perhaps we'll solve all their problems for them by simply giving up the will to live.

And so we all end up on the merry-go-round of everyone refusing to accept any responsibility for the problem and blaming someone else's systems/software for causing it and directing us to speak to the other party because "Sorry, we can't help you".

Actually people should not have to deal with things that way. One important thing developers want is to be able to find out when someone has not signed up to MTD. It is possible to infer this, but there is no clear error response saying people have not signed up.

It is, however, a joint responsibility of developers and HMRC to sort out this aspect .

Interesting stuff - from a purely defensive point of view I think that we would take the position of: If we register a client for MTD and have serious filing problems - the Gateway may well be closed (because of MTD sign up), therefore we would send a paper copy to HMRC via recorded delivery and tell the client to make payment (if his DD doesn't transfer hahaha).
If HMRC get enough paper returns through their letter box it MAY prompt some reaction.
Will this help to mitigate our risk?

It's hard to get sympathetic for the software developers, they are part of the problem, they're the ones who sold HMRC a pup in order to boost their own profits.

I for one am not going to play HMRC's silly games. If it starts taking too long to file because of their stupid software glitches, I will simply print and post. I will evidence my efforts. Let them take me to the Tribunals if they dare.

I think the institutes should finally grow some balzz over this issue and recommend this paper filing to members, rather than forcing some junior member of staff to spend an hour going round in circles when it's all HMRC's stupid fault and not ours.

They should pay us if their software doesn’t work . The whole process is going to be long winded and I feel sure the tax gap will increase and not reduce . My major concern is that if it’s just inputs and outputs the problems will be worse with other taxes as all the other bits won’t be in play . Traditional double entry will then be dead ,infact so will be the Accountant . We are being asked to advice to put ourselves out of work !!

In all discussions about MTD, there is something which is hardly mentioned. It is the rise of the "Mickey Mouse" accounting software . It is a direct result of MTD.

Basic apps (sometimes , running entirely on a mobile phone) are being presented as the full accounting and tax solution; with the usual :"click and your tax is done" slogan.

Whatever happened to the Company law requirement that directors of ltds should keep proper books and records ?

The digital revolution is happening so fast that,at some point, we will finally realise that accounting records would acquire the same properties as Quantum mechanics; what is there depends on who is looking!

With no audit trail and no paper records (assuming all supplier and sales invoices are all digital and travel only through the web, everything can be cooked up (add to this blockchains , P2P, etc.

The tax gap will become enormous and there will only be one solution for HMRC. Everyone will pay a fixed tax based on the industry they are in and their status. I cannot see any other way in the future.

Already, the financial WMD that is Derivatives is out of control. Add to this the total digitalisation of business transaction, it will be like dealing with vapour.

I see this again and again in all kinds of areas including with my adult children. If yo don't keep paper records or off line records and then are excluded from the company's account you cannot even check what was paid or when.

The move to online only might help companies save costs but it can make it very hard for consumers. If your log in in barred or you forget the deails you cannot then even see what you paid or what is owed or what your account number is or prove that fact by your audit trail.

I am not sure new mobile app accounting software is even going to allow for the complexities of many tax issues either.

I had trouble filing some March MTD VAT returns through Xero despite having successfully filed under the pilot scheme so I know I have jumped through all the hoops correctly.
Eventually Xero showed that the return had been submitted but gave no submission reference.
Two days later I have checked the HMRC website and the return is not showing as having been submitted.
Who do we turn to when something is not right? We have been taken out of the loop as Xero talks directly to HMRC but what happens when it goes wrong?

And Hmrc are encouraging people to join up. It’s very scary as I predict the system won’t work once the 7th August comes and goes . What will the Revenue do then poor things . They won’t cope with the amount of queries being fired at them which will be damaging to their reputation and image .

I just went to the HMRC updated MTD software list which now helpfully has a search tool which I had been asking for for six months - so I cuold type in bridging and business (rather than agent). However that brings up 92 providers. How much time does HMRC think sole traders with no staff have? Am I supposed to open 92 companies' websites and compared 92 products? What planet do they live on? https://www.tax.service.gov.uk/making-tax-digital-software

I would not mind if say three providers came up when I searched. I would much prefer HMRC made some bridging software available free however.

And those 92 (actually 99 as at today) only mean they bridge. It doesn't say which will work with OpenOffice or which are free. It's like the 230 on the Digital VAT Record Keeping list doesn't say which ones can do retail schemes, margin schemes, partial exemption etc. Even a large practice with a lot of staff would struggle to keep on top of this list. And in 12 months over half will have disappeared.

I know. I am usually very compliant with everything but for some reason holding back on looking at what software is available for now and will probably see how it goes with the August filing in the old way until HMRC shut it down or start sending out fines.